BHD: Strong Earnings Performance Driven by Renewable Energy, Target Price Raised
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading industrial solutions provider recently announced a robust financial performance, with its core PATAMI (Profit After Tax and Minority Interest) for the fourth quarter of FY25 surging by 59.1% year-on-year to RM6.6 million. This strong growth was primarily propelled by the impressive contribution from the renewable energy and co-generation segment. Cumulatively for FY25, the core PATAMI reached RM24.5 million, broadly aligning with both internal projections and consensus expectations, marking a solid 33.2% year-on-year growth.
Performance Review
While the company celebrated significant year-on-year gains, its core net profit experienced an 18.2% decline quarter-on-quarter. This moderation is attributed to a more conservative approach in recognizing profits from ongoing projects during the period. The renewable energy and co-generation segment’s revenue saw a six-fold increase year-on-year to RM23.5 million, reflecting substantial progress on key projects, including the Gas Malaysia project awarded in July 2025. Conversely, the process plant segment’s revenue softened to RM2.0 million following the completion of several major projects.
Future Outlook and Strategic Advantages
The company’s order book remains stable at RM108.2 million, with the bulk of projects stemming from the renewable energy and co-generation sectors, providing clear earnings visibility into FY26F. Analysts maintain a positive outlook, citing strong structural tailwinds that are expected to benefit the company. These include the National Energy Transition Roadmap (NETR), escalating industrial power demand, and the increasing adoption of alternative on-site power solutions.
The renewable energy and co-generation segment is anticipated to be the primary growth driver in the near term, while the industrial process equipment segment is expected to maintain steady operations. The company is well-positioned to capitalize on the energy transition, with its integrated engineering platform enabling tight control over cost, quality, and execution, particularly for EPCC (Engineering, Procurement, Construction, and Commissioning) co-generation projects and SEDA Feed-in-Tariff (FIT) bioenergy initiatives in FY26.
Analyst Recommendation
In light of the company’s strong performance and promising outlook, analysts at TA SECURITIES have maintained a ‘BUY’ recommendation, with a target price of RM0.25. This target price suggests a potential upside of 25.0% from its last traded price of RM0.20, reflecting confidence in its continued growth, particularly within the green energy sector.
